Institutional Investments in the Real Estate Sector Decline in Q3 2024
Institutional investments in the real estate sector experienced a significant decline in the third quarter of 2024, according to recent data. Although the sector saw an annual growth of 41%, reaching a substantial amount of USD 0.96 billion, it sharply declined from the previous quarter’s record investments of USD 3.1 billion, marking a decline of 69%.
Foreign Investors Make Substantial Contribution to India’s Real Estate Sector
Foreign investors, on the other hand, made a significant contribution to India’s real estate sector during the same period. The data revealed that they infused a staggering USD 436 million, marking a 139% year-on-year increase in investments. As a result, the share of foreign investors in the market rose from 27% in Q3 2023 to an impressive 46% in Q3 2024. Conversely, the share of domestic investors declined to 43%.
Preference for Residential Assets among Domestic Investors
Despite the decline in overall investment share, domestic investors still preferred residential assets during Q3 2024. In contrast, foreign investors dominated the commercial sector, accounting for 64% of the deals. This notable shift in preferences can be attributed to the increasing importance of work-from-office mandates and the establishment of GCCs (Global Capability Centres) in the country. Consequently, the share of commercial investments rose from 24% in Q3 2023 to an impressive 71% in Q3 2024.
Unfortunately, the overall share of the residential sector decreased to 19% in Q3 2024 from 44% during the same period in the previous year. Nevertheless, it is anticipated that investment in residential assets will grow in the upcoming quarters, driven by the rising popularity of niche asset classes such as co-living spaces, senior housing, and serviced apartments.
Chennai Emerges as the Top Destination for Investments
Among various cities in India, Chennai attracted the highest investments during Q3 2024. With a significant share of 48%, the majority of investments are concentrated in the industrial & warehousing, commercial, and residential sectors. Additionally, the data revealed that proptech platforms, which encompass innovative technology solutions in the real estate industry, garnered a substantial share of total investments, accounting for 22%.
Overall, while there was a decline in institutional investments in the real estate sector during the third quarter of 2024, there are positive signs for the future. Foreign investors have significantly contributed to the market, particularly in the commercial sector. Moreover, with the emergence of niche asset classes and continued growth in various cities like Chennai, the real estate sector continues to show promising potential for investors.
